Correction to Asia Oil Comment

By Jenny W. Hsu Features Dow Jones Newswires

Crude futures crept higher in Asia on Friday, but buying interest continued to be plagued by a global oil glut despite ongoing production cuts.

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Overnight, oil prices rose modestly after plunging into the bear market territory earlier in the week, but the bounce was mainly based on sentiment, rather than fundamental drivers, said ANZ Research.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $42.87 a barrel at 0338 GMT, up $0.13 in the Globex electronic session. August Brent crude on London's ICE Futures exchange rose $0.14 to $45.36 a barrel.

For the near term, price volatility will likely prevail as speculative traders base their moves on data, rather than trends, analysts say.

"Potential buyers are firmly sitting on the fence because the current steep contango makes it very costly to go long in the market," said Ole Hansen, head of commodity strategy at Saxo Bank, adding the market has become "very data dependent."

Energy investors will be monitoring the weekly U.S. rig count due later Friday. If the count increases again, it would be the 23rd consecutive weekly climb, deepening concerns that U.S. output is negating any cuts done by the Organization of the Petroleum Exporting Countries and non-cartel producers like Russia.

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However, U.S. production growth and crude inventories may show a decline next week as inclement weather in the Gulf of Mexico has shut a number of oil rigs and platforms, in a region responsible for 17% of total U.S. production.

Any signs of deceleration in U.S. production would be a boon for the market, which is still mired in surplus.

Meanwhile, the compliance level by countries that have joined in on OPEC's curtailment plan reached 106% in May.

"This is a convincing demonstration of the willingness of all participating countries to continue their cooperation until the set goal is achieved," said the cartel's monitoring committee.

As well, there are growing voices among analysts that the next logical step is for OPEC to include Nigeria and Libya to the cutback deal. These two OPEC nations were exempted initially on the account their output and exports were greatly blunted by years of domestic armed conflicts.

"But both countries will inevitably argue that they are pumping less oil than their potential," said Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia.

The committee's next meeting is scheduled to be held July 24 in St. Petersburg, Russia.

Nymex reformulated gasoline blendstock was flat at $1.435 a gallon, while July diesel gained 0.1% at $1.374. July ICE gasoil slid 0.9% to $408.75 a metric ton.

Write to Jenny W. Hsu at jenny.hsu@wsj.com

Corrections & Amplifications

Story corrected at 11:44 p.m. Original misstated the Nymex and Brent crude oil prices, and the level changes, in the third paragraph.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $42.87 a barrel at 0338 GMT, up $0.13 in the Globex electronic session. August Brent crude on London's ICE Futures exchange rose $0.14 to $45.36 a barrel. "Oil Ticks Higher But Outlook Still Lackluster," at 0323 GMT, misstated the Nymex and Brent crude oil prices, and the level changes, in the third paragraph.

(END) Dow Jones Newswires

June 22, 2017 23:58 ET (03:58 GMT)